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There is another thing. Do you know that the nontaxed are now driving private taxpaying businesses out of business by the thousands and thousands every year because they can sell for just about the same price? They have such big buying power that they can sell for about the same. price that the individual businessman can purchase it. They can sell for about the same price as the individual businessman across the street can buy for because he has to pay Federal, State, and local taxes no end. Those are some of the things that must be corrected if we are going to exist as a free and private enterprising nation.

I am no economist, but I was born to poor people who had to work, and there are too many people today who are trying to find a substitute for work, whether it be mental or physical-and there is no substitute. We have taught our rising generation to try to get along without work, and we have babied them to the end that now they expect everything. They expect a free education. They expect everything with a gold ring around it, and if you do not believe that statement is true look at the unrest you find among many college and university students today who apparently feel we owe them a living.

My dad used to say to his seven sons, "Remember, boys, there is no substitute for work." He said that to his five daughters, too. There is no such talk to children today.

Mr. Chairman, you will have to excuse me for lecturing.

Mr. THOMAS. Mr. Jensen, that has been very fine. Our very able and genial friend certainly is no novice in economics. I think you would do well to bring Mr. Jensen over and get a lecture from him about once a month. It would help us all.

EMPLOYMENT OF CONSULTANTS

Mr. JONAS. Dr. Heller, I do not think you answered the chairman's question as to the number of consultants you have on board now. Mr. HELLER. May I submit that for the record, Mr. Jonas? Because of the difficulty in classification I do not know exactly how many we have on a regularly consulting basis and those which would be classified as 1- or 2-day consultants.

(The following was submitted later :)

As of August 1, 1961, the Council of Economic Advisers had four official consultants, two of whom served without compensation.

Mr. JONAS. Does the last green sheet reflect the amount of payments to consultants? Is "Intermittent employment" the place you have that included?

Mr. HELLER. "Intermittent employment" is the line for the consultants, yes, sir.

Mr. JONAS. You want to increase that by $8,500?

Mr. HELLER. We do, sir. We have found that the use of part-time spot consultants for jobs which come up and which do not last for a long time, is a very economical way to handle certain parts of our functions.

Mr. JONAS. Can you furnish for the record the number that you have used so far this year, their names, and the amounts of compensation?

Mr. HELLER. Yes, sir; we can do that.

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DISCUSSION OF LIMITATION ON PERSONAL COSTS

Mr. JONAS. Was this limitation on personnel costs included in the original Employment Act of 1946?

Mr. HELLER. Yes, sir.

Mr. JONAS. $345,000?

Mr. HELLER. That is right.

Mr. JONAS. That never has been changed until this year?

Mr. HELLER. That is correct.

It was removed in the legislation

which the President signed on June 17.

Mr. JONAS. The action of Congress eliminated any limitation whatsoever. It is now open end?

Mr. HELLER. That is correct.

Mr. JONAS. I wonder why a limitation was put on it at the beginning. I imagine you were not here in 1946.

Mr. HELLER. That is right, sir.

Mr. JONAS. Why should it be open end if there was originally a reason for the legislation as it was? Of course, you are not responsible for what Congress did. I am wondering what the reasoning was. If there was a need for a limitation in 1946, I am surprised we eliminated the limitation altogether and made it wide open.

Mr. HELLER. We had the same question you did. We checked the historical record and could find no discussion of the imposition of the ceiling figure. For that reason I cannot give you a very useful answer as to why it was put in in the first place.

NEED FOR ADDITIONAL PERSONNEL REQUESTED

Mr. JONAS. I have a question which arises from a reading of page 3 of the justification. At the bottom of the page it states that under the previous administration these expanded responsibilities were handled by a staff of four people-a special assistant, a part-time assistant, and two secretaries.

Don't you think you can get along with an increase of that number. rather than going to 13?

Mr. HELLER. Mr. Jonas, I think that is a misreading of what the words "these duties" refer to. That phrase refers back to the duties performed in the previous administration by a special assistant to the President. They were the duties of day-to-day advice to the President on facts and developments in the field of economic policy. That is separate and distinct from these major new areas which the President has asked us to undertake.

What we are trying to say here is that there are really two parts to the President's charge to the Council: (1) To go into these areaswhich the chairman has already asked us about, and (2) to take over these day-to-day immediate advice duties formerly performed by Mr. Paarlberg and Mr. Hauge in President Eisenhower's administration.

Mr. JONAS. Do you intend to say that these seven new fields are entirely separate from the fields in which you are now operating? I do not see how you can operate a Council of Economic Advisers without having some consideration paid to international economics, consumer economics, manpower problems, and economic growth. I thought that is what you were doing now.

Mr. HELLER. You are perfectly right, of course, sir. The analysis of problems of economic stability, price stability, full employment and growth touch on all of these problems at one point or another. However, they have not been a subject of particular emphasis in the Council. It was the President's judgment that a good deal more intensified emphasis should be put on these fields.

NEW FIELDS OF ACTIVITY OF THE COUNCIL

Mr. JONAS. These are seven brand new fields. Can you identifyfor the record for comparative purposes what the fields are in which you are now directing your attention?

Mr. HELLER. Yes, I would be happy to.

Mr. JONAS. What are they?

Mr. HELLER. At the present time our positions are the following: Monetary economics, one position; housing, one position: industrial economics, one position; fiscal policy and taxation, one position: gross national product analysis and projections, one position; agriculture, one position; Soviet bloc economics, half a position; financial institutions, half a position: the personal assistant to the Chairman, half a position; administrative officer, one position; labor and manpɔwer·

economics, we have now one position and we are asking for the addition of one position; international economics, as Mr. Tobin mentioned, we now have a half position and are asking for an addition of two; economic growth, we have one position and are asking for an additional one. The others would be net additions in consumer economics, etc.

RELATED ACTIVITIES IN THE DEPARTMENTS

Mr. JONAS. Do we not have in the Department of Labor, in the Department of Agriculture, and in the Department of Commerce sections dealing with these same things and making continuous studies in these fields?

Mr. HELLER. Yes, sir, but we serve as a staff aid to the President and to the Cabinet. Congress deemed it necessary to have someone with an overall view to relate these particular fields into the general questions of economic stability, economic growth, and the maintenance of full employment.

The underlying research and the gathering of statistics is done in the individual departments, but the relation of these particular areas to the general economic problems and the organizing of the flow of advice to the President in these fields is handled by the Council.

Mr. JONAS. You state on page 4 that you are head of the U.S. delegation to the Economic Policy Committee of the Organization for European Economic Cooperation.

Who are the other members of that delegation?

Mr. HELLER. The other members are Under Secretary

Mr. JONAS. I don't mean by name but by title.

Mr. HELLER. The Under Secretary of the Treasury for Monetary Affairs; the Chairman of the Federal Reserve Board; and the Assistant Secretary of State for Economic Affairs.

Mr. JONAS. Do they not have task forces and special groups studying this very problem of international economics?

Mr. HELLER. Each of them is studying one phase of it. The reason that the Council Chairman was made chairman of the delegation was the point Mr. Tobin was making before. We have the overall responsibility for relating the international economic problems to domestic economic policies for full employment, price stability, and growth.

PROBLEM OF PRICES AND OUR PARTICIPATION IN THE WORLD MARKET

Mr. JONAS. I hope you will pay some particular attention to the oft-repeated comment that we are fast pricing ourselves out of the world market. I think that is one of the most serious problems we face. We seem to insist on continuing to increase our prices with built-in price supports and increases, and I do not see how we can hope to expand exports if we have to compete with people who do not have those built-in costs.

Mr. HELLER. As a matter of fact, Mr. Jonas, I was going to respond to the comment Mr. Jensen made earlier concerning our activities in this field. On the one hand, as I say, the U.S. economic policy can deal with the short-run problem of the cost of money and interest rates, but the deeper and more abiding problem is the problem of

maintaining a competitive structure of prices and wages. This is something to which the Council devotes a very substantial amount of attention.

Mr. Gordon is assigned this tough nut to crack and he serves as our liaison with the Goldberg-Hodges committee, the Labor-Management Advisory Committee, in the President's Office.

Mr. JONAS. Frankly, I have often thought if we spent as much time and attention trying to get our competitors to increase their own standards of living we could save a lot of money in foreign aid and at the same time increase the flow of international trade.

Speaking with reference to textiles, I do not believe the textile people in this country would object to competing with anybody in the world if they were competing on a fair basis. However, they cannot compete in this country with people who can produce goods at much less cost.

I would hope that at some time the administration will give us evidence of making a really serious effort to try to persuade these competitors abroad to improve their own standards of living and we would not have to do so much of it with grants and aid.

Mr. JENSEN. Coupled with that it might be well if we can encourage the labor czars not to constantly ask for more pay for employees. Mr. JONAS. When you raise wages you usually have to raise prices. We have been going through those cycles for years.

Mr. JENSEN. It was just stated Mr. Gordon has a "tough nut to crack." I should say he has.

PRODUCTION, PRICES, AND WAGES

Mr. THOMAS. Wages and prices are definitely related. Because of mass production and superior methods of production we have been able to undersell.

With production costs going up, is the man-hour production going to offset that increase in price where we can still have a fair advantage on the international market? That is the fundamental question, is it not?

Mr. HELLER. You put your finger right on the central question. If we are successful in increasing the productivity per man fast enough, then we can have higher profits and higher wages without higher prices and we will be better able to compete in the international markets.

Mr. THOMAS. I understand the greatest favor that was done the Germans after the war was the British and French coming in and looting all of their factories and the old wornout machinery.

Then the Germans bought brand new stuff and are outproducing the world.

Mr. JENSEN. I was just going to say, Mr. Chairman, that the farmers produced themselves almost into bankruptcy. During the war the Government said "Produce," "Produce," "Produce." And they did that despite the fact there were more boys per capita in the service from farms than any other group. Some of them ran their tractors all night. Many times the wives ran the tractors for 8 hours, and then the daughter, and then perhaps a 12-year-old boy or a 15-yearold boy.

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